The Importance Of Analysis & Data in Buying Bitcoin

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It’s often said that knowledge is power; this resonates even more when people are looking for the best way to buy Bitcoin.

Knowing where to buy bitcoin can mean the difference between getting scammed or not, as well as paying high fees or not.

The next step after that is digging into the analysis and data behind buying Bitcoin so that you can make an informed decision on when to buy, how much to buy, and how to keep your Bitcoin safe.

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Financial information is financial power.

This article will dig into the analysis and data behind buying Bitcoin properly.

What Does the Average Bitcoin Buyer Look Like?

It’s important to understand the average cryptocurrency holder. 

This type of information is important because it can help you determine how the market may sway, what information might affect the market, and therefore when to buy or sell.

Yahoo Finance recently reported on a study by 2gether which sought to define the average Bitcoin buyer and holder. 

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The study gave an “example of the average Bitcoin user, whom they call “Umberto”. He’s a 35-year-old male with a demanding career living in an urban centre – in their example, Milan.

To escape the pressure of his work, he enjoys dining out at fine restaurants or creating culinary delights at home. 2gether says, “Umberto represents the ultimate crypto user heading into 2020.”

Furthermore, the study went on to show the jobs the average “Umberto” holds:

Their graphic shows us that, by far, the average crypto user is either highly educated or on the path to higher education. 

You can draw your own analysis from this data, but it certainly shows that the average Bitcoin buyer is somehow who is educated enough to follow not only politics, but also the financial state of the world. 

Knowing this data, you can also perform analysis on how large financial moves  — such as the U.S. printing $3 trillion dollars — will impact the price of speculative assets such as gold and Bitcoin. 

Remember: Some Bitcoins are Lost Forever

The typical analysis of Bitcoin’s supply data shows that the total supply of Bitcoin will be 21 million. This supply limit will be reached around the year 2140.

A Forbes article analysis the way Bitcoin will achieve such a supply over a period of time:

“Given the controlled rate of block production, the block subsidy halves every 4 years or so. The total number of bitcoin that will be produced is less than 21 million, if the current code runs unchanged.

At 36 halvings, the subsidy will be less than 1 Satoshi, which is 1/100 millionth of a Bitcoin. 1 Satoshi is worth 1 ten-thousands of a cent at current bitcoin prices. Anything less than 1 Satoshi is worthless in bitcoin. 

The halving will continue after 140 years, but will yield no block subsidies. Even if one Bitcoin is worth $100 million, 1 Satoshi will only be worth $1.”

Such analysis might help you decide when to buy Bitcoin (before the supply halving limitations, for example) and how much to buy.

However, your analysis might be off.

The truth of the matter is that even though 21 million Bitcoin might exist on the blockchain, millions of them might never be accessible for buying or selling.

Think about gold bars. There is a limited supply of gold in the world. Once all the gold is mined, the supply will be fixed.

But that’s not entirely true….because gold bars can be lost. 

Gold bars lost in a locked safe might be accessible fairly easily, but how about gold bars lost in shipwrecks at the bottom of the sea? Those might be gone forever or cost more to recover than they are worth.

The same thing can happen to Bitcoin.

Users have lost their private keys and even whole hard drives full of Bitcoin. Wired magazine even reported losing $100,000 in BTC. Another man lost $127 million worth of BTC in a landfill. 

This type of data impacts the analysis of how much a Bitcoin should be worth.

Another recent Forbes article points out that:

“According to new research from Chainalysis, a digital forensics firm that studies the bitcoin blockchain, 3.79 million bitcoins are already gone for good based on a high estimate — and 2.78 million based on a low one. Those numbers imply 17% to 23% of existing bitcoins are lost.”

If such a significant portion of the supply of Bitcoin is, in fact, unsellable, then it changes the analysis of Bitcoin’s supply data. This in turn changes the dynamics of buying Bitcoin.

Such stories also press on the fact that you and everyone should always keep their private keys secure and backed up. 

In the end, analysing the data of Bitcoin will help you be wiser when it comes to buying and selling this new digital asset. 

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